NEWS ANALYSIS: A proliferation of companies are sprouting or modifying their business models to portray them as enterprise social networking savvy, but some have smarter business models than others.
Scores of companies have been promoting themselves as
players in the enterprise social networking space of late, but they are not all
created equal, with varying business models, approaches to the market and in
some cases, a bit of a me-too eagerness. But amid the pretenders are serious
contenders that bring a well-thought-out approach to the space and are
attracting serious attention from major software vendors.
The $1.2 billion bid for Yammer
by Microsoft, the nearly $700 million that Salesforce.com plans to pay for Buddy
on top of the $326 million it paid for Radian
, and Oracles purchase of Vitrue
are just some examples of the land grab by big software for enterprise social
territory. The difference between the revenues these takeover targets generated
and the price their acquirers were willing to pay for them is huge, perhaps
indicating a bubble, but also perhaps indicating the growth potential in the
space. But analysts and other industry players say the most sought after
companies do not just offer me-too marketing plans, but innovative technology
to make enterprise social networking work.
The whole point is to make a business more productive and
profitablenot just social for the sake of social.
Still, the market is fragmented, although its generally dividing
into two camps, one group that uses social media internally to enhance business
productivity and another group using social media externally to better engage
with customers. And because each of the smaller companies are niche playersoffering
unique technology or a specific
algorithmthe acquirers have to snap up several companies in order to build a comprehensive
Notably, its enterprise software companies, rather than
retailers or big advertising or marketing firms that are buying up enterprise
social media firms, said Michael Mullarkey, CEO of Brickfish, which delivers
social media programs to better engage companies with their retail customers. A
sample Brickfish campaign for Redbox, the DVD rental by vending machine
company, invited customers to Share Your Love by having a photo taken of them
hugging their neighborhood Redbox and posting it on the companys Facebook
page. Silly, perhaps, but Redbox had 3 million Likes when they took on
Brickfish and it now has 4.7 million.
Fortune 2000 companies rely on software companies like
Salesforce, Oracle and SAP for enterprise applications and are trying to find
ways to drive revenue, said Mullarkey. Its enterprise software companies
that understand that social media are going to drive transaction volume in the
years to come.
And Mullarkey explains how the acquisition strategies of the
enterprise software companies help them build their social media prowess.
Redbox, he said, uses Buddy Media to build its presence on Facebook, while
Radian 6 moderates customer comments on their Facebook page, and Brickfish
delivers loyalty campaigns and other efforts to improve customer engagement. Buddy
Media and Radian 6 are now part of Salesforce.
Its like anything else, its a big space, there are lots
of players out there, Mullarkey said.
But some of them are less than they pretend to be.
The me-too mentality is so true and I think the real
distinction is between social integration and real social innovation, said
Ashley Furness, a CRM market analyst at Software Advice, a lead-generation
business for multiple software vendors including Oracle, SAP and Microsoft
Dynamics. It helps business customers trying to buy software determine their
needs and, from that, refer them to the appropriate vendor.
There are some vendors whose solution allows a user to
import contacts from Facebook or LinkedIn into their CRM system, or to push
content from their CRM system onto social networks and calling that a social
enterprise platform, Furness said. Microsoft didnt spend $1.2 billion on
Yammer just so you could have a social sharing button in your CRM system.
The innovators in enterprise social networkingSalesforce Chatter,
Yammer and Jive, for instancehave created social intelligence algorithms,
she said, similar to Facebooks, that are based on how people use the platform
and will pick up on the kinds of information that they share with others on the
platform, what kind of groups they interact with and who theyre connected to.
The result is the delivery of more relevant information. Furness wrote a
chronicling demonstrable results from use of enterprise social by
various clients, including a 30 percent reduction in email volume, a 27
percent reduction in the amount of time spent in meetings and a 34 percent
reduction in the time it takes to find an expert who can solve a problem.
Yet, others found inadequate social media offerings to be a
distraction, said Furness. People were putting up jokes of the day or
posting an article in their news feed.
But Clay Richardson, a senior analyst at Forrester Research whos
focused on research into business process management (BPM) software, thinks the
me-too problem was more the situation two or three years ago than it is
To be sure, some BPM vendors adapt to the social trend by simply
adding some social components to their existing software, but others are about
integrating social into the existing processes they use to actually get work
done, says Richardson.
One BPM vendor, Appian, tightly
integrates social into its BPM platform to sell to its customers, said its CEO,
The applications that make up your business are full of
events, and some of those events demand interaction and so, ideally, what we
should be doing is taking those events, exposing them to the right people and
facilitating the necessary interaction right there, said Calkins.
Simply adding a social networking overlay to your existing BPM
isnt enough, said Calkins, adding, you can write social [code] in a garage in
Forrester analyst Richardson said of Appian that they kind
of bake social into the core of their BPM offering.
Richardson has seen some evidence that companies in the
health care and financial services industries are incorporating social into
their IT infrastructure for specific business-driven purposes and, although
enterprise social is not yet mainstream, when buyers of enterprise
software are evaluating products they
are increasingly adding social to their list of requirements.